Legislation and Regulations

Millions of Americans who were able to obtain health insurance as a result of the Patient Protection and Affordable Care Act (“ACA” or “Obamacare”) are waiting to learn the extent to which Congress and the new administration will repeal, replace, or do something else with the ACA. At the same time, Government contracts lawyers are watching a group of ACA-related lawsuits being litigated at the Court of Federal Claims and the Federal Circuit. The cases involve “risk corridors,” which the ACA implemented to entice insurers to enter healthcare exchanges by reducing downside risk if, among other possibilities, enrollment did not meet projections. After the ACA was implemented (and control of the Legislative branch had shifted), Congress effectively defunded the ACA’s risk corridors (i.e., reduced necessary appropriations), leaving the Department of Health and Human Services (“HHS”) without sufficient funds to pay participating insurers. So far, approximately 20 of those companies have sued and are pursuing damages claims based on the Government’s failure to make promised payments.

Last November, the Court of Federal Claims issued its first merits ruling in one of the ACA risk corridor cases, Land of Lincoln Mutual Health Insurance v. U.S. Judge Lettow’s opinion in that case rejected the plaintiff’s claims based on “statutory entitlement,” breach of contract, and Fifth Amendment taking theories. A decision in a second case, Moda Health Plan v. U.S., was issued late last week by Judge Wheeler—who ruled in that plaintiff’s favor. In Moda Health, the court held that the relevant ACA provision “requires full annual payments to insurers” and, alternatively, that the Government’s non-payment constituted a breach of the implied-in-fact contract with the insurer.

How the current administration and Congress will change ACA—and the American healthcare system—is anybody’s guess. The ACA-related cases before the Court of Federal Claims are not getting the same amount of press as potential changes to the healthcare reform law, but they address important legal and financial consequences of the long-running policy dispute over the ACA. The cases raise complex legal issues that should be of substantial interest to Government contracts lawyers and practitioners before the Court of Federal Claims and the Federal Circuit.

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On October 24, 2016, a federal district court in Texas issued a preliminary injunction in a case called Associated Builders & Contractors, et al. v. Rung, in which it halted implementation of the most controversial aspects of the newly-minted “Fair Pay and Safe Workplaces” FAR rule and the corresponding Department of Labor guidance, including the disclosure provision and the restriction on arbitration agreements. This post discusses the district court decision, which represents a sweeping repudiation of the most significant provisions of the controversial Fair Pay and Safe Workplaces rule and guidance. Mayer Brown previously published a Legal Update explaining the new rule and the Department of Labor guidance in far greater detail.
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On August 25, 2016, DoD, GSA, and NASA issued a final rule amending the FAR to implement President Obama’s Executive Order on “Fair Pay and Safe Workplaces” (“E.O.”) The Department of Labor (“DOL”) also issued final guidance to assist in the implementation of the E.O. The new FAR rule follows a proposed FAR rule that generated substantial comments. The final rule and guidance represent significant new obligations and risks for contractors and subcontractors, who should start preparing now to address them. This post focuses on the final FAR rule because it imposes specific requirements on contractors and subcontractors. Notably, this post provides only a high-level summary because the new rule, related commentary published in the Federal Register, and DOL’s guidance are lengthy and sometimes complex documents. Mayer Brown also published a Legal Update that discusses these developments in greater detail.
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On June 21, 2016, DoD published a notice in the Federal Register indicating that an advisory committee is seeking information to facilitate its review of 10 U.S.C. §§ 2320 and 2321 regarding rights in technical data and the validation of proprietary data restrictions. This is an excellent opportunity for contractors, Government contracts counsel, and others to provide input into rules that play an important role in DoD procurements involving rights in technical data. The notice requires submission of written comments in the very near future—on or before July 21, 2016. The Panel must submit its final report and recommendations to the Secretary of Defense no later than September 30, 2016.
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Back in August 2015, DoD issued an interim rule, which was effective immediately (and was previously discussed on this blog), imposing substantial new requirements on government contractors with respect to reporting information system network penetrations—and providing new cloud computing requirements. Six weeks later, DoD issued a class deviation giving contractors more time to

A few days ago, on August 26, DoD issued new interim rules amending the Defense Federal Acquisition Regulations (DFARS) with respect to “network penetration reporting and contracting for cloud services.” The new rules, which are now effective, revise several broadly applicable definitions applicable to numerous parts of the DFARS, expand the incident reporting requirements applicable to contractors, and impose security requirements applicable to cloud computing. DoD contractors need to understand these important new rules, which are summarized here, so that they can perform necessary compliance planning and make any necessary disclosures.
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iStock_000016952672LargeYesterday, the FAR Council issued an interim regulation addressing inverted corporations involved in government contracting. This interim regulation goes into effect immediately, and companies with inverted corporate structures—or those considering a restructuring—need to understand this development.
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iStock_000023483293LargeRecently, GAO denied a protest in which the contractor asserted that the solicitation contained an overly restrictive data rights clause and should have used an alternate clause. Gallup, Inc. provides a useful reminder that contracts may give the Government extensive rights over a contractor’s data and software–and, in many cases, contractors must either accept the data rights provision or opt out of the procurement. Contractors should be familiar with the relevant FAR provisions and the possible allocations of rights—or risk losing valuable rights in intellectual property.  
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A proposed rule issued June 10 would extend pervasive requirements for reporting counterfeit,  suspect, and nonconforming items to all contractors, as well as their subcontractors and suppliers doing business with any U.S. Government department or agency. Unlike the earlier counterfeit electronic parts interim rule issued by the DoD on May 6, 2014, the new

Pursuant to a legislative mandate, the US Department of Defense (DoD) has issued an expansive rule (the Rule) aimed at protecting DoD systems of all types from “counterfeit” and “suspect” electronic parts (all references to “parts” in the following discussion are to electronic parts). The Rule, issued in final form on May 6, 2014, applies